On January 23, 2019, the UK’s Competition and Markets Authority (“CMA”) announced that it had secured undertakings from 16 social media influencers, including well-known names such as Ellie Goulding, Rosie Huntington-Whiteley and Rita Ora, that commit each influencer to increased transparency when they promote or endorse brands or services on social media on behalf of businesses.The CMA stressed that applicable UK consumer law requires that it be made clear when posts are sponsored (i.e., paid or incentivized).  The CMA also disclosed that it has sent warning letters to other (unidentified) influencers and celebrities, and indicated it will continue to consider the role of social media platforms in this issue.This enforcement action, together with the CMA’s recent success in court against secondary ticketing website Viagogo, and more recent threat to take Viagogo to court again, is evidence that consumer protection enforcement remains high on the CMA’s agenda.

Below, we summarise key elements of the undertakings in more detail, and also refer to further available UK regulatory guidance on how to advertise on social media.

Consumer Law and the Requirements of the Undertakings

The relevant legislation under which the CMA is seeking to enforce is the Consumer Protection from Unfair Trading Regulations 2008 (“CPRs”).  Under the CPRs, promoting a product in the media without disclosing that the promotion has been paid for by the trader of the product is a prohibited unfair commercial practice.  The undertakings secured by the CMA therefore require social media influencers:

  • For each post that endorses or reviews products:  to clearly identify (i) if the influencer has or will be paid for the post; and (ii) if the influencer has within the last year prior to the post received or been promised any payment by the relevant brand or business.
  • For each paid-for post:  to not (i) falsely claim or create the impression they are acting outside their profession or represent themselves as a consumer; or (ii) claim the product can achieve particular results where they have not personally used the product and achieved those results.

The undertakings also require influencers to comply with the UK Code of Non-Broadcasting Advertising, Sales Promotion and Direct Marketing, and in particular section 2 on the Recognition of Marketing Communications (which sets out rules to ensure marketing materials are clearly identified as such) and section 3 on Misleading Advertising (which sets out rules to ensure advertisements are not materially misleading), and associated guidelines published by the Advertising Standards Authority (“ASA”).

Further guidance

In September 2018, the CMA, ASA and the Committee of Advertising Practice (“CAP”), published guidelines for social media influencers on advertising.  The guidelines specify which rules apply to advertising on social media, and which social media posts will be deemed advertising.  The guidelines also illustrate how social media influencers can make clear to consumers that a post is sponsored, e.g., by including labels such as “#Ad” or “Advertising”.  The guidelines warn against using “riskier labels” such as “Sponsor”, or “in association with,” or simply mentioning the brand name.

The CMA has also published further guidelines for social media influencers on transparency with followers.  In the guidelines, the CMA sets out examples of practices which it does believe sufficiently identify the post as sponsored, but also practices that the CMA considers do not go far enough.  The CMA notes that the use of the tag “#ad” is valid, but warn that the tag should not be “hidden at the end of or among other text and/or hashtags.”  This suggests the CMA may not consider the current (frequent) practice, of merely putting “#ad” at the end of each sponsored post description (often after a string of other tags), as sufficient.